Aussie Dollar Hits Two-Month Low Amid Mixed Economic Data

• The Australian Dollar fell to a two-month low of 0.6418 on Thursday.
• Australia’s S&P Global Manufacturing PMI climbed to 52.9, with the Service PMI increasing to 55.1 in August.
• Recent FOMC meeting minutes indicate most members felt maintaining interest rates was the right decision.

The Australian Dollar (AUD) has been on a downward trend against the US Dollar (USD) for four straight days. This drop continued Thursday even though the S&P Global Australia’s Purchasing Manager Index (PMI) showed positive preliminary results. The AUD/USD exchange rate remains under pressure, with another PMI report from the US expected later today.

Australia’s S&P Global Manufacturing PMI increased from 51.3 to 52.9 in August, while the Service PMI also improved from 54.1 to 55.1. The Composite PMI also saw an uptick, moving from 53.8 to 54.9. However, consumer inflation expectations in Australia rose to 3.9% in August, contrasting with a higher previous figure of 4.7%.

Following last week’s interest rate cuts, the Reserve Bank of Australia (RBA) is likely to proceed with caution. Traders are anticipating potential easing measures from central banks, possibly in November, including a more substantial cut of 50 basis points.

The minutes from the Federal Open Market Committee (FOMC) meeting held on July 29-30 highlighted that numerous Federal Reserve officials prioritized inflation risks over labor market stability. Most policymakers viewed it as suitable to keep the benchmark interest rates in the 4.25% to 4.50% range.

US Dollar Holds Steady Ahead of Powell’s Key Speech

• The US Dollar Index (DXY), which gauges the USD against six prominent currencies, is trading around 98.20. Market participants are eagerly waiting for Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole Symposium on Friday, which could shed light on upcoming policy decisions.
• White House press chief Karoline Leavitt announced on Tuesday plans for a bilateral meeting between Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy.
• US President Donald Trump stated that there are currently no US troops on the ground to support a potential peace deal in Ukraine. The security agreement terms remain under negotiation between the US, European partners, and Ukraine.
• The Trump administration has implemented an expansion of the 50% tariffs on steel and aluminum imports effective August 18. The notice on Friday included a new product code in the US harmonized tariff schedule, and Trump hinted at further announcements regarding steel tariffs and new taxes for semiconductor imports.
• The People’s Bank of China (PBOC) revealed changes to its one- and five-year loan prime rates, now set at 3.00% and 3.50% respectively.
• U.S. Treasury Secretary Scott Bescent noted recent talks between the US and China are progressing well and expressed optimism for US growth recovery in the fourth quarter, emphasizing China’s significant role in tariff revenue.
• In Australia, consumer sentiment as measured by Westpac increased by 0.6% in July, with a further rise of 5.7% in August, bringing it to 98.5. This emotional shift has been observed since February 2022, as the RBA has raised rates by a total of 75 basis points since January. However, analysts suggest that while the long-term outlook for consumer pessimism might be shifting, a careful approach is still necessary, and there’s not much immediate pressure on policymakers to enact further cuts.
• The RBA is broadly expected to cut interest rates by 25 basis points during its next meeting, adjusting the official cash rate to 3.6% from 3.85%.

Aussie Dollar Tests Two-Month Low Around 0.6400

The AUD/USD exchange rate is hovering around 0.6430 as of Thursday. A look at the daily charts reveals that the downward price trend is gaining momentum, especially as it slipped below the nine-day exponential moving average (EMA). Furthermore, the 14-day relative strength index (RSI) is below the neutral 50 mark, indicating a prevailing bearish sentiment.

If the trend continues downwards, the AUD/USD pair might aim for the two-month low of 0.6419 established on August 1, before potentially hitting the three-month low of 0.6372 from June 23.

On the upside, the initial resistance appears at the nine-day EMA, currently positioned at 0.6473, followed by the 50-day EMA at 0.6492. A breakthrough in this critical resistance zone could energize short- and medium-term price movements, aiming for previous monthly highs noted on August 14 and possibly reaching the nine-month high of 0.6625 witnessed on July 24.

AUD/USD: Daily Insights

Current Australian Dollar Exchange Rates

The rates below reflect the changes in the Australian Dollar (AUD) against major currencies today, highlighting the AUD as the weakest relative to the British Pound.

The table above illustrates the percentage changes of the Australian dollar against major currencies. The left column shows the base currency, while the top row denotes the estimated currency.